Navigant Research Blog

C3 Wins Big with Italy’s Enel

— October 14, 2014

While the details are slim, C3 Energy has revealed that it has been selected for a $64.4 million deal to provide professional support services and software as a service (SaaS) solutions to Italy’s largest electric utility, Enel.  Of that sum, $18.3 million will be subcontracted, leaving about $46 million in deal value for C3.  The news was published in the EU’s Tenders Electronic Daily (TED).

C3 is a Redwood City, California-based utility analytics solutions provider started by Tom Siebel, founder of Siebel Systems.  Enel has some 32 million meters, implying a deal value of around $2 per endpoint, assuming the company’s entire grid is included.

The news follows on C3’s May win with Baltimore Gas and Electric, which is deploying the company’s revenue protection and advanced metering infrastructure (AMI) operations analytics solutions across its 2 million meters.  In June, Northeast Utilities contracted with C3 to deploy its Energy Customer Analytics platform.  The customer engagement platform will inform customers about the specifics of their energy use and provide custom recommendations for energy conservation.  Northeast Utilities has 3.6 million customers across Connecticut, Massachusetts, and New Hampshire.

Second Act

The Enel deal, however, dwarfs these stateside contracts, and should go a long way toward establishing C3 in the European utility market.  Enel’s was the first major nationwide AMI program worldwide; the rollout began in 2001 and deployment was completed in 2011.  This new contract provides further validation of the C3 solution, which was only launched in 2009.

C3’s solution is notable for its SaaS model, which hasn’t been fully embraced by utilities.  Over the past year or so, however, the model has been adopted by a number of big utility vendors, such as Itron, with its Itron TOTAL solution.  AT&T is also promoting a managed service offering for AMI.  C3 says that utility silos are breaking down and that its solution’s machine-to-machine learning capabilities are ideal for applications like predictive maintenance.  The company also offers analytics solutions for asset management, cyber security, and demand response, among others.

Perhaps the larger lesson from the Enel news is that Tom Siebel – who became a billionaire after selling his Siebel Systems to Oracle – is no one-hit wonder.  Anyone who can survive being stomped and gored by an elephant is not to be taken lightly.

 

In South Korea, an Energy Storage Bonanza

— October 14, 2014

South Korea has gone from having little to no energy storage to procuring about 50 MW in the span of a few months.  This procurement makes the early projects in deregulated markets in the United States, such as PJM Interconnection, seem small in comparison.

Korea Electric Power Corporation (KEPCO) is procuring 52 MW of advanced batteries for frequency regulation in 2014 through two installations totaling 28 MW and 24 MW.  Proposals will be evaluated in the coming weeks, and four consortia, including major South Korean lithium ion (Li-ion) vendors and systems integrators, are bidding in the procurement.  Located at the West Anseong Substation and the New Yongin Substation, these installations will handle power supply to Seoul and the surrounding area.  KEPCO estimates the cost for these two projects will be ₩60 billion ($58.3 million).  The total market size for frequency regulation in South Korea is estimated by to be 1.1 GW, and in order to meet this requirement, KEPCO typically requires thermal generators hold back 5% of capacity, for which it pays them ₩600 billion ($583 million) per year.

Less Regulation = Lower Costs

Instead of using thermal generators for all its frequency regulation requirements, KEPCO estimates it can procure 500 MW of energy storage for frequency regulation for ₩625 billion ($607.8 million) between now and 2017.  By investing in these resources, KEPCO would be able to avoid a portion of the yearly payments to thermal generators.

Lessons from existing projects and market reforms in Chile and the United States suggest that these changes will have major effects on the South Korean grid.  First, wholesale energy prices should decrease once thermal generators are not obligated to hold back 5% capacity for frequency regulation.  Although KEPCO is not planning to displace its entire frequency regulation requirement with Li-ion batteries, releasing half the power plants from this obligation (or halving the obligation to 2.5%) would make a difference in energy prices.

Ratepayer Returns

Second, the overall amount of frequency regulation that KEPCO must procure should decrease with the addition of fast, accurate resources such as Li-ion batteries.  Fast and accurate resources correct the deviation in frequency more quickly, meaning that less frequency regulation is required overall.  Therefore, 5% (52 MW) of fast-response resources could deliver more than 5% of the regulation required on the South Korean grid.

Ultimately, the South Korean ratepayer will benefit because these savings should be passed on to the customer.  Keeping energy prices low is an economic and political issue in South Korea, where many key industries rely on energy-intensive exports.  Manufacturers are keen to keep their products priced competitively, and the government is under pressure to keep improving economic growth.

 

Autonomous Vehicles Coming Sooner Than Predicted

— October 14, 2014

Recent developments in the automotive industry indicate that semi-autonomous vehicles may be coming to market sooner than previously expected.  In early September, General Motors announced that it will introduce a 2017 Cadillac model equipped with advanced driver assist technology – allowing drivers to travel at highway speeds without touching the steering wheel or pedals.  Elon Musk, CEO of Tesla Motors, stated that the company plans to introduce self-driving technology in the next 3 years with the new Model 3 electric sedan (due for release in 2017).  Musk also gave some longer-term forecasts: “Full auto-pilot capability is going to happen, probably, in the 5- or 6-year time frame.”  Additionally, Audi became the first company to receive the newly established autonomous driving permit, issued by the state of California.  As discussed in earlier blogs by my colleague David Alexander, the United Kingdom, China, and South Korean company Hyundai have also been active in the autonomous vehicle space.

New Market Entrants

Israel-based technology company Mobileye has recently received considerable media attention and market interest for its advanced driver assistance technology.  The company went public on August 6, 2014 at $25.00 per share.  Since the IPO, Mobileye’s share price has more than doubled to $51.23 as of September 24.  The company’s products are integrated into vehicle models from global automakers, including BMW, Ford, General Motors, Honda, Nissan, and Volvo.  Mobileye also works with several Tier One suppliers, including Autoliv, Delphi, Continental, Magna Electronics, and TRW Automotive.

Too Big to Ignore

Growing interest in autonomous vehicles can be attributed to the fact that the benefits of the technology are simply too large and far-reaching for policymakers, investors, and analysts to ignore.  In the United States alone, 33,561 people died and about 2.36 million people were injured as a result of traffic accidents in 2012, according to the National Highway Traffic Safety Administration.  The majority of all auto accidents (75% to 90%) are caused by driver error, distraction, or impairment.  In theory, fully autonomous vehicle traffic would prevent nearly all of these driver-related accidents.  Self-driving vehicle technology also has the potential to drastically reduce CO2 emissions, traffic congestion, and the stress of driving.

Navigant Research expects the global market for fully autonomous vehicles to average about 4.6% of new vehicle sales in 2025, rising to 40% in 2030 and reaching nearly 75% by 2035.

 

California Reaffirms EV Leadership

— October 13, 2014

California Governor Jerry Brown has doubled down on the Golden State’s commitment to electric vehicles (EVs) by enacting six laws aimed at promoting EVs.  The package of legislation includes two laws aimed at making EVs available to a broader audience of individuals – one for people who live in multi-unit dwellings and another with incentives for getting EVs into carshare programs.

Landlords in California now cannot block the installation of EV charging equipment through restrictive leases if renters agree to pay the costs.  This law will help California’s large renter population join the EV crowd and could help the state reach its goal of 1 million EVs on the road by 2023.  Most purchasers of EVs to date live in single-family homes, and this law removes one potential obstacle for broader adoption.

According to Navigant Research’s report, EV Geographic Forecasts, which was produced before these new laws were passed, California was likely to have approximately 820,000 light duty EVs on the road by 2023.

PEVs on the Road, California and the United States: 2014-2023

(Source: Navigant Research)

Smoggy and Dry

California is home to 7 of the 10 cities in the United States with the worst air quality, including smoggy Bakersfield, and has endured 3 consecutive years of drought, which is motivating Governor Brown to continue efforts to promote emissions-free driving in the state.  Some of those afflicted communities might breathe a little easier in future years, as another of the new laws targets incentives for placing EVs in carsharing programs in lower income areas with air quality problems.  EVs make sense in carshare and rental programs, as users don’t have to refuel the vehicles, and motorists who have a good experience could later become EV purchasers.  However, even after federal and state incentives, higher priced EVs are still out of reach of many consumers.

Incentives for plug-in vehicle drivers, such as HOV access, have proven critical in increasing EV adoption.  States such as California, Georgia, Oregon, and Washington that offer financial and other incentives are also the top sellers in EVs per capita.  According to HybridCars.com, sales of plug-in hybrids are up 44% over last year, while sales of battery electric vehicles are up 20%.

 

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